Trade discount versus commission for taxable service led to unconditional waiver of pre-deposit and stay of recovery.

Trade discounts or incentives linked to vehicle sales and spare-parts purchases may, on a prima facie view, fall outside consideration for Business Auxiliary Service where the recipient acts as owner of the vehicles rather than as a commission agent. The Tribunal found the appellant's explanation supportable and held that the balance of convenience favoured protection against recovery pending appeal. Unconditional waiver of pre-deposit was therefore granted and recovery of the service tax demand was stayed until disposal of the appeal.

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Issues: Whether the appellant was entitled to unconditional waiver of pre-deposit and stay of recovery in respect of the service tax demand.

Analysis: The appellant disputed the demand on the ground that the amounts received from the principal supplier were trade discounts or incentives linked to vehicle sales and purchases of spares, and not commission for any taxable service. The Revenue had proceeded on the footing that the receipts formed consideration for Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. On a prima facie view, the appellant's contention that it acted as owner of the vehicles and earned discount, rather than commission, was found to be supportable. The balance of convenience was, therefore, in favour of protection against recovery pending disposal of the appeal.

Conclusion: Unconditional waiver of pre-deposit was granted and recovery of the demanded amount was stayed till disposal of the appeal.

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